A payment bank running under the name Paytm Payments Bank was viewed by many as already having the government in its pocket, but now the Reserve Bank of India is putting the squeeze on it. The consequence is that the Central Bank has issued an order to the National Payments Corporation of India to develop a way by which Playtm will be allowed to keep operating the offerings of its popular Unified Payments Interface from a fresh standpoint.
From March 15, 2024, Paytm Payments Bank will no longer accept to-be-credited customers’ accounts and wallets. Hence, this initiative could disrupt the digital payment experience of many Indians using the classic ‘@paytm’ tag.
The RBI offers a potential solution instead. The RBI has advised NPCI to consider allowing Paytm’s controlling entity, One97 Communication Limited, to act as a third-party application provider for UPI. Consequently, @paytm can operate even though the internals will have changed.
Also, the RBI has appointed NPCI to shortlist and authorize about 4-5 Banks as PPBs (Payment System Provider Banks). Sommore, these banks should be ready to handle massive UPI transactions associated with Paytm.
While all this is happening, the fintech sector follows with much interest. The question for the industry stakeholders is whether Paytm will be able to do the balancing act of staying ahead in digital payments while also negotiating with the regulatory bodies. Leaving all the doubts aside, we have to conduct intense negotiations shortly that will bring together a requirement of compliance and consumer convenience.
